Ridesourcing and AVs: How they are Intricately Connected

Autonomous vehicles are likely to be introduced in ridesourcing enterprises backed by traditional auto industry powers. Don’t believe me? Let me make my case:

Uber is 8 years old – and its market value is worth as much, if not more, than 108 year old GM.  And this has not gone unnoticed!  As such, traditional automakers (Original Equipment Manufacturers or OEMs) are starting to shift their business model.  How do we know? by following the money:

That’s a lot of money moving from the old fashioned to the new hotness!  But here’s the kicker, Uber is losing money each year – this is mostly from lawsuits against them because they haven’t been the best public partners.  But also, a lot of their money goes to paying their drivers, so much money actually that Mary Ibarra, the CEO of GM, has said that ridesourcing services are not scalable without autonomy.

So despite the massive downside of eliminating jobs, with autonomy the price per mile of travel drops to around 30-60 cents, which makes using ridesourcing super attractive (and opens it up to a market of people that couldn’t afford to buy their own cars).  This low cost could threaten transit – which is a terrible terrible thing – but make for a very attractive business model where OEMs don’t sell you cars, but rides instead.

Of course there is also the issue of liability, and the idea that if an OEM is responsible for when their system fails, why would they ever let you be the ultimate maintainer of that system (in other words why would they sell you a car when you could mess up the maintenance and expose them to liability for wrecks). Trust me, that liability thing is a big deal, and could delay the possibility of you owning your own AV for a long time!

So to recap:

  • Ridesourcing scales well (and makes a profit) with autonomy
  • Selling rides is a better business than selling cars
  • Liability issues make sense for OEMs to want to always maintain control of their AVs and never sell to a private party.

and that, my friends, are how ridesourcing and autonomy are intricately connected.

thanks for reading!

James